The United States has one of the world’s fastest recovering economies, with its first quarter GDP (for three months ended March 31) increasing at a 6.4% annualized rate. Solid progress on the vaccination front and impressive job growth have been driving the country’s recovery in the second quarter. According to the back-to-normal index, the United States is currently operating at 91% of its pre-pandemic levels…
Stocks with solid growth attributes are expected to be the biggest beneficiaries of this recovery because declining unemployment and rising consumer spending have been driving a substantial rise in corporate sales and profits. The country’s annualized GDP growth expectation of 10.3% in the current quarter (ending June 30) indicates the solid growth prospects of companies that prioritize growth over all else.
However, given that many growth stocks have become expensive now, we think betting on relatively undervalued growth stocks Regeneron Pharmaceuticals, Inc. (REGN – Get Rating), Energy Transfer LP (ET – Get Rating), and POSCO (PKX – Get Rating) could be highly rewarding.
Regeneron Pharmaceuticals, Inc. (REGN – Get Rating)
REGN discovers and manufactures various medicines for serious medical disorders worldwide. The company offers a wide range of medical products including EYLEA (aflibercept), Praluent (alirocumab), ARCALYST (rilonacept), Kevzara (sarilumab), and ZALTRAP (ziv-aflibercept).
REGN is an established pharmaceutical company known for its diversified products and drug pipeline that caters to serious ailments. REGN’s revenues increased at a 14.1% CAGR over the past three years. Its net income rose at a 41% CAGR over the past three years, while its EPS improved at a 41.8% CAGR over this period. The company’s EBITDA increased at a 18.8% CAGR over the past three years.
REGN’s total revenues increased 38.3% year-over-year to $2.53 billion in its fiscal first quarter, ended March 31. Its operating profit grew 58.9% from the year-ago value to $1.11 billion, while its net income improved 78.5% year-over-year to $1.12 billion over the period. The company’s EPS increased 85.8% year-over-year to $10.09.
On June 4, REGN received FDA emergency use approval for REGEN-COV™ to treat COVID-19 patients. With this approval, this drug is expected to be widely demanded because several cases of COVID-19 are still being reported in the country. The drug is already authorized by the European Union for treating COVID-19 infections and its side effects. With an immense market reach, this drug should contribute heavily to REGN’s growth.
A $2.85 billion consensus revenue estimate for the fiscal third quarter, ending September 2021, indicates a 36.4% improvement from the same period last year. Analysts expect the company’s EPS to come in at $10.13 in the next quarter, representing a 21.2% rise year-over-year. REGN has surpassed the Street’s EPS estimates in each of the trailing four quarters.
Given the company’s immense growth prospects driven by its innovative COVID-19 treatment drug and diversified product pipeline, the stock is undervalued. In terms of non-GAAP forward P/E, REGN is currently trading at 10.83x, 55% lower than the 24.08x industry average. Its 4.39 forward Price/Sales multiple is 43.3% lower than the 7.74 industry average.
REGN gained 4% over the past six months to close yesterday’s trading session at $514.99. The stock has gained 6.6% year-to-date.
REGN has an overall A rating, which equates to Strong Buy in our proprietary POWR rating system. The POWR Ratings are calculated considering 118 different factors, with each factor weighted to an optimal degree.
REGN has an A grade for Growth and Value, and B for Quality and Sentiment. It is ranked #1 of 489 stocks in the Biotech industry.
Beyond what we’ve stated above, we have also rated REGN for Momentum and Stability. Click here to view all REGN Ratings.
Click here to checkout our Healthcare Sector Report for 2021
Energy Transfer LP (ET – Get Rating)
ET has been a midstream energy leader in the United States for nearly 25 years. The company stores and transports natural gas, crude oil and refined products. ET’s segments include intrastate and interstate transportation and storage, midstream, NGL and refined products transportation and services, crude oil transportation and services. ET has an impressive growth history. Its net income rose at a 48.1% CAGR over the past three years, while its EBITDA increased at a 22.5% CAGR over this period. The company’s earnings before interest and taxes increased at a 27.7% rate per year over the past three years.
ET’s revenues increased 46.2% year-over-year to $17 billion in the fiscal first quarter, ended March 31. Its income from continuing operations grew 6,570.5% from the year-ago value to $4.07 billion. ET’s net income came in at $3.64 billion, indicating a 477.7% rise year-over-year. The company’s net income per limited partner unit increased 478.1% year-over-year to $1.21.
On June 1, ET priced a public offering of…
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